Earlier this month the same legislation cleared the Arizona House which leaves only Governor Jan Brewer’s signature before it becomes law.
While U.S. currency will continue to be accepted in the Grand Canyon State, the new bill allows gold and silver coins and bullion to be used beginning mid-2014.
Utah passed a similar law in 2011. Kansas, South Carolina and several other states are advancing similar bills.
While Utah and Arizona’s legislation is little more than symbolic, other states are eyeing infrastructure projects key to allowing precious metals to be used as legal tender.
Texas legislators are considering a measure to create the Texas Bullion Depository that would store about $1 Billion in gold currently held in a New York facility. The new facility would also function as a place for public deposits which would create a realistic medium for trade similar to blacksmiths’ and bankers’ handling of the precious metal in earlier times. Money could be deposited for one or more “depository notes” which could be traded for goods and services. The person receiving the notes in trade could then turn it in to the depository for gold. The notes would likely be backed by the State government and its gold holdings.
While the U.S. Constitution prevents states from coining money, it also says that states may not “make anything but gold and silver coin a tender in payment of debts” a phrase likely opening the door for states to pass these precious metal currency bills.
The States’ moves are seen as a response to the Federal Reserve’s constant dumping of liquidity into the American economy thereby devaluing the dollar and, as many believe, leading to the collapse of the U.S. paper money.
While some states may be taking action as a symbolic nose-thumbing at the Fed, others are clearly planning for the potential downfall of the dollar.